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Case 1:92-cv-00550-MCW

Document 143

Filed 10/23/2006

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS NORTHEAST SAVINGS, F.A.
Plaint%
) ) ) ) ) ) ) ) ) )

v. UNITED STATES OF AMERICA,
Defendant.

Civil Action No. 92-550C Judge Williams

PLAINTIFF'S RESPONSE TO DEFENDANT'S NOTICE OF DEPOSITION TESTIMONY COUNTER- AND CROSS-DESIGNATIONS OF MESSRS. BURKE, MORIARTY, RICCOBONO, RYAN AND WARE Pursuant to the Court's ruling from the bench during the October 17 pre-trial conference, and the Court's order dated October 17, Plaintiff Northeast Savings, F.A. ("Northeast") hereby respectfully responds to Defendant's Notice of Deposition Testimony Counter- and CrossDesignations of Messrs. Burke, Moriarty, Riccobono, Ryan and Ware ("Defendant's Notice"), as corrected notice, filed October 23, regarding its designations of testimony well as ~efendant's from Mr. Riccobono. Northeast has reviewed the Government's counter-designations and crossdesignations of the deposition testimony given by Messrs. Burke, Moriarty, Riccobono (as corrected), Ryan, and Ware. While Northeast believes that some of the Government's designations address subject matters that are different from the subject matters addressed in Northeast's original designations, and that therefore such designations by the Government are not needed to place IVortheast's designations into context, Northeast does not object to the Government's designations. Northeast does respectfully submit, however, that if the Court does admit the testimony designated by the Government, it should also admit a few additional excerpts from the Burke, Ryan, and Ware depositions that are needed to place the testimony designated by the Govern-

Case 1:92-cv-00550-MCW

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ment into context. In particular, Northeast has identified the following testimony "which ought in fairness . . . be considered," RCFC 32(a)(4), with the testimony designated by the Government: John Burke James Ware John Ryan 28: 16 - 28:23 (excerpt attached at Tab 1 of Defendant's Notice) 70:23 - 72:5 (excerpt attached at Tab 5 of Defendant's Notice) 41 :18 - 42: 12 (excerpt attached hereto at Tab 1)

Respectfully submitted, s/Charles J. Cooper Charles J. Cooper COOPER KIRK, & PLLC 555 Eleventh Street, N.W., Suite 750 Washington, D.C. 20004 (202) 220-9600 (202) 220-9601 (fax) Counsel of Record Of Counsel: Michael W. Kirk Vincent J. Colatriano David H. Thompson David Lehn COOPER KIRK, & PLLC 555 Eleventh Street, N. W., Suite 750 Washington, D.C. 20004 (202) 220-9600 (202) 220-9601 (fax) Dated: October 23, 2006

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CERTIFICATE OF SERVICE

I hereby certify that on this 23rd day of October, 2006, copies of the foregoing Plaintiffs Response to Defendant's Notice of Deposition Testimony Counter- and Cross-designations of Messrs. Burke, Moriarty, Riccobono, Ryan and Ware were filed electronically. Notice of this filing will be sent by operation of the Court's electronic filing system to all parties indicated on the electronic filing receipt. Parties may access this through the Court's system.

IS/ Charles J. Cooper Charles J. Cooper & PLLC COOPER KIRK, 555 Eleventh Street NW Suite 750 Washington, DC 20004 (202) 220-9600 (202) 220-9601 (fax) [email protected]

Case 1:92-cv-00550-MCW

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PLAINTIFF'S RESPONSE TO DEFENDANT'S NOTICE OF DEPOSOTION TESTIMONY COUNTER- AND CROSS-DESGNATIONS OF MESSRS, BURKE, MORIARTY, RICCOBONO, RYAN, AND WARE

TAB 1

Case 1:92-cv-00550-MCW
John E. Ryan

Document 143-2

Filed 10/23/2006

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April 23,2003

Atlanta, GA

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Q. And so by "reduce it," should I take it you mean -- well, tell me what you mean by that. Flush that out for me. A. As I recall they had several billion dollars worth of securities that they purchased with hot money. And they had a very slim capital level to support the risk. I thought they should reduce the debt exposure, because it was too much risk for the bank to take, shouldn't be as big as it was. Q. The risk-control arbitrage portfolio shouldn't have been as big as it was? A. That was my opinion, yeah. Q. Now, do you recall a change in management at the bank? A. I do. Q. And can you tell me about that. A. You know, I don't recall why it happened or -- I just have vague recollections of Dixon being out. And they brought -- was it George Rutland in to run it, who was a banker I think from California or the west coast or someplace, I thought. I could be wrong about that. Q. And do you recall having

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branches it became a little testy. Q. Do you remember, was he cooperative with you, 1 guess would be a good way to phrase that? A. Yeah, I think so. Q. Do you remember agreeing with -well, did he want to change the direction of which the bank was headed? A. Yes. Q. Do you recall agreeing or disagreeing with the changes he wanted to make? A. In general I agreed with him. Q. You disagreed with him on some of the New York issues? A. That's correct. Q. Do you recall Mr. Rutland's new direction at all? A. Well, he was -- it was in general to run a thrift institution rather than a market-based kind of strategy that the former management was going to run. He was going to wind down this huge arbitrage, concentrate on building the franchise, and make more loans locally and deal with the local customer base.

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correspondence with Mr. Rutland? A. Yes. Q. Would that again have been letters and personal? A. Personal meetings and letters, yeah. Q. How about the name Kirk Walters, do you recall that? A. No. Not really. Q. Do you remember there being a change in the relationship between the FHLB Boston and Northeast Savings with this change in management? A. Yeah. I think there was. I think Mr. Rutland shared some of our concerns about the risk-controlled arbitrage. Q. Okay. A. He was going to reduce that. Q. Okay. A lot of this time period we have to piece together from other people because Mr. Rutland passed away a few years ago. Do you remember -- would you characterize his relationship with you as having been a good one? A. Eventually. Q. Eventually? Not as first? A. I think at first it was okay. And then when he wanted to sell his New York

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Q. Now, when you say he was going to run more of a thrift institution. Can you tell me what you mean by that. A. Well, he was going to take deposits from local customers, instead of buying money from Wall Street. And instead of investing in residuals and exotic instruments that were involved in the risk-controlled arbitrage, he was going to invest in generating local business. Q. So would you characterize this as a basic retail/residential thrift operation? A. Yes. Although I don't think he was exclusively residential. 1 think he was looking at some commerciaI and other kinds of business. It was a local business. It was a hands-on kind of business rather than a Wall Street operation. Q. Do you recall how -- to the extent you guys discussed this -- do you remember how he planned to unwind the risk-controlled arbitrage position that Mr. Dixon had taken? A. I think was going to do it over time. Q. Any idea of how long? A. No. It took some doing to unwind

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Alderson Reporting Company, Inc.

1 111 14th Street, N.W. Suite 400 1-800-FOR-DEPO Washington, DC 20005

Case 1:92-cv-00550-MCW
John E. Ryan

Document 143-2

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April 23,2003

Atlanta, G A

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-- that had to be undone and had to match up

it, 1 think. There were complicated hedges and

his funding with his unwinding. Jt was taking -- going to take a while. Q. Did you agree with that strategy? A. Yes, I did. Q. So you didn't recommend to him that he dump this entire portfolio overnight? A. 1 don't think to. Q. Do you think that that would have been a sound strategy? A. No. Q. Do you recall having any contact with Mr. Rutland since you left FHLB Boston in '89? A. I do. I do. And it is vague. Because I remember -- first of all, let me say Rick Ricobono, who was our regulatory counsel when I was in the Boston bank, stayed in Boston. And when I came down to Atlanta -and then he joined me down here as my deputy in February or March of 1990. And I remember Rick telling me that Rutland was extremely g r a t e l l that we stopped him from selling the New York branches, because it turned out that

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these. A. All right. (Documents marked as Plaintiffs Exhibit-2 and Exhibit-3.) Q. (By Mr. Todd) Does taking a few minutes to read this document refresh your recollection as to its contents? A. Yes. Q. Have you seen this document recently? A. Yes. Q. Is this a document you reviewed to prepare for today's deposition? A. Yes. Q. Having had a chance to read it, do you find this is consistent with the testimony you gave a few minutes ago regarding investments and high yield bonds? A. I believe so, yes. Q. And the risk-controlled arbitrage strategy? A. Right. Q. Now, let me direct your attention to you the bottom of page two. The last sentence of the last paragraph. Based on that would you agree with me that, at that point in time at

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that was the franchise that really added value to the organization. And I recall having a conversation or two with Rutland himself. Q. Again, limiting to when you were in Boston, obviously the OTS and FDIC and a number of other agencies were sued by a lot of people in connection with those cases. Do you recall the lawsuits being brought against FHLB Boston for whatever reason prior to 1989? A. No. Q. No, you don't. MR. TODD: Let's take a short break. (Whereupon there was a brief pause in the proceedings from 10:35 a.m. to 10:40 a.m.) Q. (By Mr. Todd) Mr. Ryan, I'm going to show you a series of documents. Some of them might look familiar to you based on what you told me earlier. (Document marked as Plaintiffs Exhibit- I.) Q. (By Mr. Todd) Sir, can you take a minute to Iook at that. With all these documents take as much time as you need to look at them. I want to you feel comfortable with

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least, the arbitrage portfolio was turning a -it did have a positive spread on it. It was returning a profit, albeit a slight one? A. That's what it indicates. Q. Let me go ahead and give you what I've marked as Exhibit 2. Again, take a minute to read it. A. Okay. Q. Going back to Exhibit 1 for minute, which is a March 18th letter? A. Right. Q. From you to Mr. Kent Dixon. Is that a fair characterization? A. That's right. Q. Turning to page 3, the last substantial paragraph the paragraph starting, "in view of the above." A. Yes. Q. Could I characterize that paragraph as being your recommendation to Northeast Savings about what you thought it should do with regard to the risk-arbitrage position? A. Yes. Q. I'll just read it for the record. It says, "Therefore, we would

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Alderson Reporting Company, Inc. 1 111 14th Street, N.W. Suite 400 1-800-FOR-DEPO Washington, DC 20005